Bitcoin (BTC) headed to multi-day highs after Wall Street opened on August 23 as US economic data faltered in the dollar.
BTC/USD 1-hour candlestick chart (Bitstamp). Source: TradingView
Dollar suffers as data shows income ‘shrinked’
Data from Cointelegraph Markets Pro and TradingView follows BTC/USD as it is eyeing $21,700 at the time of writing, close to resistance in place since last week’s drop of nearly 12%.
The pair gained momentum as the US Purchasing Managers’ Index (PMI) for August showed a decline from the previous month, reaching its lowest levels since May 2020 at the height of the first round of COVID-19 lockdowns.
“The S&P Global Flash Index of U.S. service business recorded 44.1 in August, down from 47.3 in July, to indicate a further decline in overall services activity,” said a press release from S&P Global custodians.
“The decline in business activity was generally sharp and was the fastest since May 2020. Providers noted that increases in interest rates and inflation reduced customer spending as disposable incomes diminished.”
The implied slowdown in demand has had a direct impact on the dollar’s strength, with the US Dollar Index (DXY) dropping from fresh twenty-year highs.
US Dollar Index (DXY) candlestick chart. Source: TradingView
Conversely, the inversely correlated DXY has been rallying rapidly in the previous days, coinciding with US stocks facing resistance and Bitcoin seeing multiple trips below $21,000.
The August composite PMI fell to 45 from 47.7 in July. The reaction of gold supporter Peter Schiff was expected to rise to 49.2.
“The services PMI fell to 44.1, the lowest level since May 2020 and the manufacturing index fell to 51.3, the lowest since July 2020. The US PMI is weaker than any PMI in Europe or Asia.”
US S&P Global Flash PMI Composite Index chart. Source: S&P Global / Twitter
The S&P 500 and Nasdaq Composite are up a modest 0.25% and 0.45% at the time of writing, respectively.
BTC bulls face a $21,700 challenge
Analyzing what could be next for risky assets, commentators are hoping stocks will rise on the back of a falling dollar.
RELATED: Losing Bitcoin Addresses Hit One-Month High As Bitcoin Price Retests $21,000
Popular Twitter account Game of Trades described the S&P 500 as “extremely oversold in the short term” based on Relative Strength Index (RSI) data.
“Watch out for all the potential bullish RSI variations I picked up along the way,” part of a new update.
On Bitcoin, optimism from some also focused on a return to the tops of the range since June, with a “clean break” above $25,000 to emerge of $28,000 or more.
As for the material indices for the on-chain analytics resource, meanwhile, a breakout of $21,700 was needed as a first step.
“If we don’t see more BTC bids coming in above $21,000, the downside of liquidity (dark areas) will be exploited,” he warned alongside a chart of support and resistance levels in the Binance order book.